Mainstream macroeconomics would suggest that fiscal policy
A)affects GDP and the price level through changes in aggregate supply.
B)changes aggregate demand and GDP through the multiplier process.
C)has no effect unless the fiscal policy is accompanied by changes in the money supply.
D)is relatively ineffective because the outcomes are anticipated and offset.

Question

Quizplus · Accepted Answer

Fiscal policy affects aggregate demand and GDP through the multiplier process, where government spending or tax changes lead to further changes in consumption and investment.

Mainstream Macroeconomics Would Suggest That Fiscal Policy